NEW YORK (AP) - The Standard & Poor's ratings agency said Monday it's getting more optimistic about the U.S. economy. But investors just yawned.
Stocks budged higher when trading opened, shortly after the S&P agency raised its outlook for the U.S. government's debt rating and credited "the strengths of the economy." But the gains proved both modest and fickle, and the market spent most of the day flitting between small gains and losses.
At day's end, the Dow Jones industrial average and the S&P 500 were lower, but just barely. The Nasdaq composite was slightly higher. It was a marked change from Friday, when the Dow jumped 207 points after a jobs report that investors viewed as positive.
Trading volume was light, and there were no major economic reports or company announcements. The 10 industry sectors in the S&P were split down the middle, with half rising and half falling, but none moved dramatically. The best performer, telecommunications, was up 0.8 percent. The worst, consumer discretionary, was down 0.3 percent.
The S&P's statement harkened back to August 2011, when the agency slashed its rating of the U.S. government's debt because Congress was in a heated battle on raising government spending limits. The downgrade, an embarrassment to the U.S., also sent the stock market into a tailspin. The Dow plunged 634 points on the first trading day after the downgrade. The market had triple-digit swings throughout that fall.
On Monday, S&P upgraded its outlook on the U.S. debt rating to "Stable" from "Negative." That doesn't restore the U.S. government's top-shelf credit rating, but it does mean that S&P is unlikely to cut the rating again in the near future.
S&P cited the Federal Reserve's willingness to keep interest rates low, which is meant to spur borrowing and spending, and its bond purchasing program, which is meant to encourage investors to buy stocks and other riskier assets. S&P also noted approvingly that Congress had agreed to raise some taxes this year, notably the Social Security tax that most workers pay, which has helped shrink the government's budget deficit.
The reaction from investors was a far cry from two summers ago. Some doubted the S&P's assessment that the economy is improving, and said the Fed is only artificially propping it up.
Ed Butowsky, managing partner of Chapwood Investments in Dallas, said that the unemployment rate is still too high, economic growth too weak and the government's budget deficit too heavy for the economy to be considered healthy.
The Dow closed down 9.53 points at 15,238.59, a loss of 0.06 percent. The S&P 500 index was essentially flat, falling 0.57 point to 1,642.81, or 0.03 percent. The Nasdaq composite edged up 4.55 points to 3,473.77, a gain of 0.1 percent.